Contra Entry in Three-Column Cash Book: Meaning, Format, and Examples

Contra entry is one of those small ideas in accountancy that looks more confusing than it really is.

You see the same amount appearing twice in the cash book. One side says cash. The other side says bank. The ledger folio column has the letter C. At first, it may feel like a duplicate entry.

But it is not a duplicate.

It is simply a transfer between two places that both belong to the same business: cash in hand and cash at bank.

Once you understand this, contra entries in a three-column cash book become much easier to place.

What Contra Entry Means

A contra entry is an entry where both sides of the transaction are completed inside the cash book itself.

In a three-column cash book, the cash column and bank column are both present. So when money moves between cash and bank, both parts can be recorded in the same book.

The two most common contra entries are:

Transaction	What happens
Cash deposited into bank	Cash decreases, bank increases
Cash withdrawn from bank for office use	Bank decreases, cash increases

The business has not earned income. It has not paid an expense. It has only shifted money from one form to another.

Think of it like moving money from your wallet to your bank account, or from your bank account back into your wallet. Your total money has not changed. Only its place has changed.

Why Contra Entry Appears in a Three-Column Cash Book

A three-column cash book has three amount columns on each side:

Debit side	Credit side
Discount, Cash, Bank	Discount, Cash, Bank

The debit side records receipts.

The credit side records payments.

Now imagine this transaction:

Deposited cash into bank Rs. 10,000

Cash is going out of the cash box, so the cash column must be credited.

Bank balance is increasing, so the bank column must be debited.

Both cash and bank are inside the cash book. That is why the same amount appears on both sides of the cash book.

The entry is complete inside the cash book, so it is marked C.

The Simple Rule

Use this rule:

If cash goes to bank, debit bank and credit cash.
If cash comes from bank, debit cash and credit bank.

That is the whole logic.

Situation	Debit side	Credit side
Cash deposited into bank	Bank column	Cash column
Cash withdrawn from bank for office use	Cash column	Bank column

Format of Contra Entry

In a three-column cash book, a contra entry is shown on both sides.

For cash deposited into bank:

Debit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Amount

Credit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Amount

For cash withdrawn from bank for office use:

Debit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Amount

Credit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Amount

The names in the particulars column may feel opposite at first. But they show the other account involved in the same internal transfer.

Example 1: Cash Deposited Into Bank

Transaction:

Deposited cash into bank Rs. 12,000

What is happening?

• cash in hand decreases
• bank balance increases

So the entry will be:

Debit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Rs. 12,000

Credit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Rs. 12,000

This is a contra entry because both sides are inside the cash book.

The business has not paid an outsider. It has only moved cash into its bank account.

Example 2: Cash Withdrawn From Bank for Office Use

Transaction:

Withdrew cash from bank for office use Rs. 5,000

What is happening?

• cash in hand increases
• bank balance decreases

So the entry will be:

Debit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Rs. 5,000

Credit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Rs. 5,000

This is also a contra entry because money has moved from bank to cash.

The Word “Office Use” Matters

This is a very important point.

When the question says:

Withdrew cash from bank for office use

it is a contra entry.

The money has come out of the bank and entered the business cash box. It is still business money.

But when the question says:

Withdrew cash from bank for personal use

it is not a contra entry.

That is drawings. The money has gone to the owner for personal use, so it is recorded on the credit side in the bank column as Drawings A/c.

Wording in question	Treatment
Withdrawn from bank for office use	Contra entry
Withdrawn from bank for business use	Contra entry
Withdrawn from bank for cash office	Contra entry
Withdrawn from bank for personal use	Drawings, not contra
Withdrawn from bank by proprietor	Usually drawings, not contra

Opening a Bank Account With Cash

Another common contra entry is:

Opened a bank account with cash Rs. 20,000

This means cash was taken from the business and deposited into the bank.

So the treatment is the same as cash deposited into bank:

Debit Side	Column
Cash A/c	Bank column Rs. 20,000

Credit Side	Column
Bank A/c	Cash column Rs. 20,000

Mark C in the ledger folio column on both sides.

Cheque Deposited Later: Is It Contra?

This is where many students slow down.

Suppose a cheque is received from a customer. If the question says the cheque is received and deposited on the same day, it is usually entered directly in the bank column on the debit side.

Example:

Received cheque from Rohan Rs. 8,000 and deposited it into bank on the same day

This is recorded on the debit side in the bank column against Rohan’s name.

But if a cheque is received today and deposited later, many school-level cash book questions first treat the cheque as cash received, and then show the later deposit as a transfer into bank.

Example:

Received cheque from Rohan Rs. 8,000
Deposited Rohan's cheque into bank later

The later deposit may be shown as a contra entry because the cheque was first included in cash and then moved to bank.

Wording	Usual treatment
Cheque received and deposited on the same day	Debit side bank column
Cheque received but not deposited the same day	Debit side cash column first
Same cheque deposited later	Contra entry to bank

What Is Not a Contra Entry

Not every bank or cash transaction is contra.

A contra entry needs both cash and bank columns. If only one of them is affected, it is not contra.

Transaction	Contra entry?	Why
Cash sales	No	Only cash increases
Paid rent in cash	No	Only cash decreases
Paid supplier by cheque	No	Only bank decreases
Bank charges	No	Bank decreases, but cash is not involved
Interest credited by bank	No	Bank increases, but cash is not involved
Cash deposited into bank	Yes	Cash decreases and bank increases
Cash withdrawn from bank for office use	Yes	Bank decreases and cash increases

This table is useful because students often mark every bank transaction as contra. That is not correct.

Contra entry is only for movement between cash and bank.

Full Mini Example

Prepare the contra entries for these transactions:

Date	Transaction
April 1	Started business with cash Rs. 40,000
April 3	Opened bank account with cash Rs. 25,000
April 8	Cash sales Rs. 12,000
April 10	Deposited cash into bank Rs. 10,000
April 14	Withdrew cash from bank for office use Rs. 6,000
April 18	Paid salary by cheque Rs. 4,000
April 21	Bank charged commission Rs. 300
April 25	Withdrew cash from bank for personal use Rs. 5,000

Let us identify only the contra entries first.

Date	Contra or not?	Reason
April 1	No	Opening cash balance
April 3	Yes	Cash moved to bank
April 8	No	Cash sales only
April 10	Yes	Cash moved to bank
April 14	Yes	Bank moved to cash for office use
April 18	No	Payment by cheque
April 21	No	Bank charge
April 25	No	Personal withdrawal is drawings

Now record only the contra entries.

April 3: Opened Bank Account With Cash

Debit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Rs. 25,000

Credit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Rs. 25,000

April 10: Deposited Cash Into Bank

Debit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Rs. 10,000

Credit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Rs. 10,000

April 14: Withdrew Cash From Bank for Office Use

Debit Side Particulars	L.F.	Discount	Cash	Bank
Bank A/c	C		Rs. 6,000

Credit Side Particulars	L.F.	Discount	Cash	Bank
Cash A/c	C			Rs. 6,000

Notice that April 25 is not contra. Since the cash was withdrawn for personal use, the entry is Drawings A/c on the credit side bank column.

Why Contra Entries Are Not Posted Again

The cash book acts as both a book of original entry and a ledger for cash and bank.

When cash is deposited into bank, both Cash Account and Bank Account are already represented inside the cash book.

That is why the entry is marked C.

The C tells you:

Do not post this again to another ledger account.

If you post it again, you will repeat the same transfer unnecessarily.

Common Mistakes in Contra Entry

Mistake 1: Writing Only One Side

A contra entry must appear on both sides of the cash book.

If you deposit cash into bank, show bank on the debit side and cash on the credit side.

Mistake 2: Treating Personal Withdrawal as Contra

Cash withdrawn from bank for personal use is drawings, not contra.

The business bank balance decreases, but business cash does not increase.

Mistake 3: Marking Bank Charges as Contra

Bank charges are not contra. They reduce the bank balance and are recorded on the credit side in the bank column.

Mistake 4: Using the Discount Column

Contra entry has nothing to do with discount allowed or discount received.

Use only the cash and bank columns.

Mistake 5: Posting the Entry Again

Contra entries are marked C because they do not need outside ledger posting for the cash and bank transfer.

Mistake 6: Forgetting the Direction

Cash deposited into bank and cash withdrawn from bank are opposite.

Do not use the same side for both.

A Quick Practice Set

Try deciding whether each transaction is contra.

Transaction	Contra?	Treatment
Deposited cash into bank Rs. 9,000	Yes	Debit bank, credit cash
Paid rent by cheque Rs. 3,000	No	Credit side bank column
Withdrew cash from bank for office use Rs. 4,500	Yes	Debit cash, credit bank
Withdrew cash from bank for personal use Rs. 2,000	No	Drawings in bank column
Bank credited interest Rs. 600	No	Debit side bank column
Opened bank account with cash Rs. 15,000	Yes	Debit bank, credit cash
Cash sales Rs. 7,500	No	Debit side cash column
Bank charged commission Rs. 250	No	Credit side bank column

If you got these right, the main idea is clear.

Final Way to Remember Contra Entry

Here is the simplest memory line:

Cash to bank: Bank Dr, Cash Cr.
Bank to cash: Cash Dr, Bank Cr.

In cash book language:

Movement	Debit side	Credit side
Cash to bank	Bank column	Cash column
Bank to cash	Cash column	Bank column

Do this slowly in the beginning. After a few questions, the placement starts becoming automatic.

Frequently Asked Questions

What is a contra entry in a three-column cash book?

A contra entry is an entry that affects both the cash column and the bank column of the same cash book. It is used when money moves between cash in hand and cash at bank.

Why is C written in the ledger folio column?

C is written to show that the entry is a contra entry. It also reminds us that the cash and bank part of the entry is already complete inside the cash book and does not need normal ledger posting again.

Is cash deposited into bank a contra entry?

Yes. Cash deposited into bank is a contra entry because cash decreases and bank balance increases. It is recorded in the bank column on the debit side and the cash column on the credit side.

Is cash withdrawn from bank a contra entry?

It depends on the reason. If cash is withdrawn from bank for office or business use, it is a contra entry. If cash is withdrawn for personal use, it is drawings and not a contra entry.

Are bank charges contra entries?

No. Bank charges are not contra entries because cash is not involved. They are recorded on the credit side in the bank column.

Is payment by cheque a contra entry?

No. Payment by cheque reduces the bank balance, but it does not increase cash. So it is recorded on the credit side in the bank column, not as a contra entry.

Which columns are used in contra entry?

Only the cash column and bank column are used. The discount column is not used in contra entry.

Should contra entries be posted to the ledger?

The cash and bank part of a contra entry is not posted again to a separate ledger account because it is already complete inside the cash book.

What is the easiest way to remember contra entry?

Remember the movement. Cash to bank means debit bank and credit cash. Bank to cash means debit cash and credit bank.

Why do students make mistakes in contra entries?

Most mistakes happen because students read only one word, such as “withdrawn” or “bank”, and do not check the full meaning. Always ask whether money moved between business cash and business bank. If yes, it is contra. If not, it is not contra.